Condos’ high-rising insurance premiums are a top issue in these legislative races

Jillian Anderson was planning to make fighting crime in Waikiki the top issue in her campaign for a seat in the Hawaii House of Representatives. Then came the letter from her condo association announcing a 300% increase in insurance premiums, which would be passed on to owners through an assessment.

That amounts to approximately $2,000 for Anderson, she said. Now, she added, critical issues facing condo owners in Waikiki and the rest of Hawaii — especially spiking insurance costs — top her agenda.

“Before my No. 1 issue was public safety,” says Anderson, a 27-year-old Republican office manager for Rep. Gene Ward. “In terms of immediate needs and having to find immediate solutions, this has risen to the top of the list.”

Anderson isn’t the only candidate highlighting the alarming spike in insurance premiums that is driving up housing costs for condo dwellers. Her opponent in Waikiki’s District 24, incumbent Rep. Adrian Tam, a Democrat, also says his No. 1 issue is the unstable condo insurance market. Tam co-sponsored a bill designed to stabilize condo insurance costs this past session. The measure stalled in conference committee.

Tam says it’s important to craft a policy not just to stabilize but to lower premiums.

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“Condominium insurance is the main thing that people are looking at now,” Tam said.

In neighboring House District 23, which includes condo-dense Makiki, McCully and Moiliili, Ian Ross is one of four candidates running for an open House seat. He echoed Tam, saying discussions about housing affordability these days often center on insurance.

“The condo insurance issue has become the housing issue,” Ross said. “People talk about it all the time.”

Insurance Rates Keep Climbing

A confluence of factors is driving the condo insurance increases. At the center of the problem are master hurricane insurance policies covering condominium structures and common areas.

None of Hawaii’s hurricane carriers has pulled out of the market, Hawaii Insurance Commissioner Gordon Ito said in a recent interview. But he added that at least one insurer won’t provide 100% coverage against hurricane losses — essentially coverage to pay for replacing an entire building.

That means many condo associations are going to the pricey secondary insurance market to cobble together coverage at exorbitant rates, and passing on costs to owners.

In reality, it’s unlikely that a hurricane would completely obliterate a condo in Honolulu, so condo owners and their associations would be safe with less than 100% coverage. But many mortgage lenders require 100% coverage, so buildings without such coverage end up on “do not lend” mortgage blacklists, meaning units in those buildings can only be bought and sold with cash.

That leaves condo associations two choices: pay high costs for insurance or end up on blacklists.

It’s easier to identify the problem than a solution. A number of candidates are calling for a special legislative session to address condo insurance. The problem, Tam says, is that unless lawmakers have a bill to discuss, such a session will be a waste of time and energy.

“We need to have a bill before us before we start a special session,” he said. “The speaker can gavel us in. The Senate president can gavel us in. But we won’t have a hearing until we have a bill before us.”

Sen. Sharon Moriwaki, who is up for reelection in District 12 that includes Ala Moana, Kakaako, McCully, Moiliili, Sheridan and Waikiki, agrees it makes no sense to call a special session without any bills to hear.

“I’m looking forward to having some good solutions and having them ready for next session,” she said.

One challenge, she said, is coming up with a solution that doesn’t drive insurers away.

“If the insurers leave, we’re in deep kimchee, because we need them,” Moriwaki said.

Protecting The Owners

Condo issues go beyond insurance. Kim Coco Iwamoto, who is running to unseat House Speaker Scott Saiki for the District 25 post that includes Kakaako, has been stumping for months on a platform that calls for numerous additional protections for condo owners.

Saiki declined to comment for this article. But he has been engaged on the insurance issue, among other things holding a town hall meeting in March that drew a packed house at McKinley High School. He also sponsored a bill this past session, which Gov. Josh Green signed into law in May, that will enable condo associations to obtain low-cost financing to pay for things like sprinklers and deferred maintenance.

Iwamoto has been campaigning on what she says is the Legislature’s failure to pass bills giving more power to individual condo owners when disputes arise with their hired property managers and elected association boards. In a “report card” mailer sent out recently, Iwamoto gave lawmakers a grade of “F+” for failing to pass any one of a handful of condo bills.

Among them were measures to rein in excessive attorney fees charged to owners, create an ombudsman to help resolve disputes and make it easier to vote out board members by allowing electronic and mail-in voting.

Such proposals have sparked bitter opposition from condo association lawyers, management companies and other experts who thrive under the current system. Under Hawaii law, condo associations are private, self-governing entities held together by contracts that people enter into voluntarily when they buy a condo and join the association. Accordingly, the argument goes, less government interference is better: Neighbors should be allowed to settle their disputes among themselves, without Big Brother stepping in.

For Iwamoto, it’s a matter of housing security. She says the current system isn’t working for many people and is among those calling for a special session.

“This is something affecting so many residents across the state that it deserves the focus of a special session,” she said.

The message is gaining traction. The Makiki Neighborhood Board that Ross chairs passed a resolution last spring supporting the passage of bills to create the ombudsman, change the condo board election process, increase transparency by condo boards, and require training for board members and licensure for property managers.

Even if only a few of these passed, Ross said, “the bottom line is this is something that would benefit a lot of condo owners.”

Anderson said she supports many of these changes.

Pat McCain, who’s running against Ross for the District 23 seat, serves on the board of the association at Holiday Parkway in Kapahulu. He’s proud, he says, that the condo association fee is just $550 a month for a 1-acre property with a swimming pool.

McCain agrees that an ombudsman might be helpful to help sort out disputes. But he said his experience has taught him that the biggest problem for owners is that management companies and others that do business in the condo ecosystem can overrun weak boards and run up unnecessary costs on owners.

“The industry that lives off the condos is always stampeding them,” he said.

Tam he said he especially supports the ombudsman and election changes. But he said condo insurance is the critical issue now.

“The insurance issue is the one that’s on my mind every day,” he said.

Among those watching the campaigning is Bobae Kim, a Kakaako housing activist who organized residents of Honuakaha, a state-owned affordable rental complex for seniors that includes market-rate condos for sale.

Kim started agitating for changes in 2023 after elderly residents complained of black mold, faulty appliances that shocked them and, in one case, the smell of a body wafting from an apartment where a dead resident had been left for more than a week while building managers refused to perform a welfare check. Another elderly resident was threatened with eviction over a 50-cent debt.

Things have changed since then, thanks to new management, Kim says. She said she’s happy candidates are giving attention to issues affecting condo owners. But she said she hopes those making promises will follow through.

“It’s great that they’re acknowledging the issue,” she said. “I just hope it’s not just for campaigning and that they actually do something.”

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This story was originally published by Honolulu Civil Beat and distributed through a partnership with The Associated Press.